Florida Condo Life

[FullMotoJacket]

IIf my house collapses, I still own the plot of land that it sits on - which is arguably worth more than the house itself.

it’s a bit different if you’re in an area with (relatively) large lots that’s undergoing gentrification like mine is. My lot is worth more without the house on it than with.

 

[nobbie48]

It is a very interesting question that I don't know the answer too. Co-ops are much simpler in that regard as you own 1.2% of the development as opposed to Unit 402 and parking spot 11 and a portion of the common areas. If a co-op collapsed, presumably you'd owe 1.2% of the site cleanup bill and get 1.2% of the sale price (minus some fees). If Unit 402 and parking spot 11 no longer exist, what do you own?

I suspect that falling down is better for you (if you survive) than beyond economical repair. A collapse triggers insurance. I don't know if they are sufficiently insured to rebuild but at least it's something. Beyond economical repair, the value of the condo drops to zero as nobody wants to get stuck with the hot potato. I haven't looked recently but a decade ago there were some condo-townhouses in Malton for cheap (~half the price of similar units in other developments). Condo fees for those units (which did not have ridiculous amenities) were something like $1000 when comparable developments were <$200. I don't know if they had screwed up the reserve fund or things were falling apart but it was obviously enough to scare buyers away.

An acquaintance in interior BC owned a typical hi-rise condo unit. Part of the condo development was townhouses which were sliding down the hill and most likely were going to need to be destroyed. He wanted to sell his condo (which was entirely structurally sound with no issues) and the market price had taken a beating. The best guess was $100K per unit special assessment was coming to clean up the townhouse mess. It was a guess, so the market was pricing in a $200K+ special assessment as the buyers wanted some room in case the guess was low. This was ~30% hit to the condo price.

What a person owns in a condo, particularly high rise, is sketchy. I tell people contemplating the purchase of a condo that they only own the air inside. I think that they own the outer layer of the drywall or equivalent. Typically the balcony and parking space is common element, exclusive use. You can't put nifty tile work on your balcony or a workbench /shelving in your parking spot.

A condo is typically a not-for-profit corporation. I don't know if the corporation status protects the owner from liability beyond the assets of the unit. If you own shares in XYZ Widget Inc and their widgets kill a bunch of lawyers the shareholders only lose their shares, not their RRSP's etc. Instead you own 1% of Peel Condominium Corporation XXX.

The condo owner might be more protected than the single family home owner. If his chimney falls on a bunch of lawyers, crippling three or four of them all of the home owners assets are up for grabs.

Once a condo is no longer liveable the sale creates a problem because of capital gains and profits from a not-for-profit organization.

How do you get rid of a white elephant?

A friend purchased a time share in New England but bought into a cheap unit in a nice complex. It was in the dumpy part, next to the garbage room etc. Once he found better suites he couldn't get rid of the old one but still had to pay the fees.

He found another owner that was going bankrupt and sold him the undesirable unit for a dollar. The creditors would eventually take the unit.

The acquaintance in BC with the good part of a bad corporation is in an awkward spot if the corporation is one and all common element costs are shared. Some complexes share services but those are laid out before the building slides down the hill. Typical shared facilities are parking garage ramps serving two buildings, swimming pools and gyms, party rooms etc. If you own a first floor unit in a building with elevators and a parking garage but you don't drive, you still pay the costs of maintenance.

 

[Baggsy]

Apparently, there are issues in California as well. This one since 2016.
Millenium Tower Fix Halted